Six months after revealing the whole Modi 3.0 regime budget, FM nirmala sitharaman is preparing to publish the Union Budget 2025 on february 1, 2025.
In light of rising inflation and shifting spending patterns, taxpayers are anxiously anticipating possible tax rate cuts and increased exemption limits.
The current government's proposed New Tax Regime is the main topic of discussion due to the rising cost of living and declining disposable incomes. Experts are urging Budget 2025 to include HRA, improve Section 80C tax deductions, and establish a standard deduction of Rs 1 lakh.
Standard Deduction
To streamline the tax structure, the Union Budget 2020 proposed the New Tax Regime as an alternative to the current one. In exchange for the elimination of several exemptions and deductions that were available under the previous system, such as the standard deduction and the house rent allowance (HRA), this regime offers lower tax rates.
Both the Old and New Tax regimes include provisions for salaried employees' basic deductions. All paid employees who choose the Old Tax Regime are eligible for a Standard Deduction of Rs 50,000 under both tax regimes, regardless of their gross salary income. This also holds for retirees. FM Sitharaman raised the standard deduction for salaried persons under the New Tax Regime to Rs 75,000 in Budget 2024.
"Salaried persons would anticipate some alleviation from the tax burden they incur on their salary income with the eagerly anticipated Budget 2025. Following the implementation of the New Tax Regime in recent years, the Hon'ble Finance minister (FM) said in the 2024 budget that individuals who choose the New Tax Regime would be eligible for an enhanced standard deduction of Rs 75,000 per year, as opposed to INR 50,000 annually for those who choose the Old Tax Regime.
The Hon'ble FM should consider restoring parity for those choosing the Old or New Tax Regime and raising the standard deduction to a minimum of INR 1.20 lakhs annually due to inflation and increases in medical and transportation costs since FY 2018–19 when the standard deduction was reinstated.
According to Santhosh Sivaraj, Partner, Global Employer Services, Tax & Regulatory Services, BDO India, "this would seem practical as any salaried taxpayer would be incurring INR 10,000 per month / INR 1.20 lakhs annually collectively towards transport and medical expenses."
The standard deduction was eliminated in FY 2005–06, but the late Hon'ble FM arun jaitley restored it in the 2018 budget. He replaced the prior exemptions for medical expenditures and transportation allowance with a standard deduction of Rs 40,000 for salaried taxpayers in his budget address.
In light of rising inflation and shifting spending patterns, taxpayers are anxiously anticipating possible tax rate cuts and increased exemption limits.
The current government's proposed New Tax Regime is the main topic of discussion due to the rising cost of living and declining disposable incomes. Experts are urging Budget 2025 to include HRA, improve Section 80C tax deductions, and establish a standard deduction of Rs 1 lakh.
Standard Deduction
To streamline the tax structure, the Union Budget 2020 proposed the New Tax Regime as an alternative to the current one. In exchange for the elimination of several exemptions and deductions that were available under the previous system, such as the standard deduction and the house rent allowance (HRA), this regime offers lower tax rates.
Both the Old and New Tax regimes include provisions for salaried employees' basic deductions. All paid employees who choose the Old Tax Regime are eligible for a Standard Deduction of Rs 50,000 under both tax regimes, regardless of their gross salary income. This also holds for retirees. FM Sitharaman raised the standard deduction for salaried persons under the New Tax Regime to Rs 75,000 in Budget 2024.
"Salaried persons would anticipate some alleviation from the tax burden they incur on their salary income with the eagerly anticipated Budget 2025. Following the implementation of the New Tax Regime in recent years, the Hon'ble Finance minister (FM) said in the 2024 budget that individuals who choose the New Tax Regime would be eligible for an enhanced standard deduction of Rs 75,000 per year, as opposed to INR 50,000 annually for those who choose the Old Tax Regime.
The Hon'ble FM should consider restoring parity for those choosing the Old or New Tax Regime and raising the standard deduction to a minimum of INR 1.20 lakhs annually due to inflation and increases in medical and transportation costs since FY 2018–19 when the standard deduction was reinstated.
According to Santhosh Sivaraj, Partner, Global Employer Services, Tax & Regulatory Services, BDO India, "this would seem practical as any salaried taxpayer would be incurring INR 10,000 per month / INR 1.20 lakhs annually collectively towards transport and medical expenses."
The standard deduction was eliminated in FY 2005–06, but the late Hon'ble FM arun jaitley restored it in the 2018 budget. He replaced the prior exemptions for medical expenditures and transportation allowance with a standard deduction of Rs 40,000 for salaried taxpayers in his budget address.
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